Amazon Air includes 50 planes and several new regional hubs, including a $1.5 billion hub opening in northern Kentucky in 2021. Amazon’s play into logistics and shipping is so they can lower their shipping cost and control their destiny of getting that package to your house…the so called “last mile.” Amazon even had the nerve to in their 2018 annual financial filing to list “transportation and logistics services” as competitors for the first time. However, according to UPS Amazon is years away from this happening.
UPS Inc. (NYSE: UPS) reported on Wednesday, July 24 that next-day air volumes in its second quarter surged by 30 percent over the year-earlier period, a pace of year-on-year gains that no one can ever recall. The numbers were likely skewed by volumes from e-tailer Amazon.com, Inc. (NASDAQ: AMZN) which migrated to UPS after FedEx Corp. (NYSE: FDX) said in early June that it wouldn’t renew its U.S. air services contract with Amazon.
Still, coming on the heels of UPS reporting an 8 percent year-on-year increase in the first quarter, Wednesday’s results indicate that after 20 years in the desert, next-day air has found a trend – namely the push toward one-day delivery spearheaded by Amazon’s move to compress delivery commitments for users of its “Prime” service – it can sink its teeth into.
However, UPS was downgraded by Stifel’s today with a $118 target price. Stifel stated that investors may want to consider waiting for a better opportunity to buy the “large, improving cash flow machine” of a company. Was the downgrade, random or planned? The downgrade occurred right when price came into daily and monthly supply, so the downgrade wasn’t random….this is just how Wall Street works.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.